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What Rates Should You Setup On Your Accommodation Establishment Internet Booking Engine?

We’re all in business to make money, but when you work in the hospitality industry, setting up rates can be fraught with pitfalls.

If you’re the only hotel in a one-horse town, you can structure your rates as you like, but if you’re doing business in a tourist hotspot, you’re surrounded by fierce competitors.

In these cases, it can be difficult to fill your rooms and pay your bills, let alone make a profit. So, if you’re wondering how your rates can stand up and stand out in this competitive environment, keep reading.

Subtle Imitation is the Key

The first rule of thumb when you’re working on your rates is to take whatever you’re doing with online travel agents and go one better.

Ultimately, you want all your clients to book directly through your online booking portal, so you don’t have to lose money to commission. There are several ways to do this.

Getting the BASE-ics Right

Your very first task is to work out your absolute minimum rate per night in order to break even. It’s unrealistic to figure this out according to 100% occupancy. Most accommodation providers only manage to fill around half of their room nights over the course of a year.

If at all possible, avoid setting your rates below this threshold, unless you can make up the money on selling extras like meals.

Step two is setting up your rates structure. You need to decide whether you want to charge per person, per room, or a set rate for a base number plus extra for additional people.

For instance, in a four-sleeper unit, you could charge x amount for the first two and then a certain percentage of that rate for every additional person. This can encourage a couple to book with you when you only have large units available, whereas a more costly ‘per room’ rate might put them off.

When it comes to refunds, make sure you have a more expensive refundable rate versus a cheaper non-refundable rate.

This means the guest pays less with the non-refundable rate, but they don’t receive a refund in the event of cancellation. A slightly elevated flexible rate for refundable bookings helps cover your admin costs incurred in refunding their payment if the guest cancels.

Yield Management

Yield management is a vital part of rate setting. Your rates should automatically fluctuate according to how full your rooms are, and even how full your competition is.

During busy periods, your rates can be higher, while quiet times call for tactical rate setting.

Time-Centered Rates

Demand in the accommodation industry wavers like the wind and depends very much on where you are located. In popular family areas, school holidays and long weekends tend to be your peak times. Your next most popular times would be during special events in your area, followed by weekends. Weeknights in these locations are the quietest times of all.

In some areas, summer is the top season, while other areas thrive in winter; again, it’s very much location dependent.

Likewise, if you’re located in an area that’s popular for business travel, the opposite may apply. i.e. weeknights might be your busiest times while things die down on weekends.

Only experience and time will tell which times are busiest for your hotel, lodge, or resort. If you’re unsure about how this works in your area, glance at some of your competitors’ websites to find out how their prices fluctuate throughout the year.

These are some of the time-centric rates you should set up to maximize occupancy year-round:

Everybody loves a client who books and pays early, so reward them with preferential rates. A discounted early bird booking rate can really encourage people to commit to their bookings and help you plan ahead.

These discounted fees for late bookings are good for filling up rooms at the eleventh hour. Make sure your system’s set up to offer these rates when you have a certain percentage of rooms available with a specified time frame.

One way to set up these rates is with a 50/50 split between these two time frames.

Take your total rate for the week and divide it by two. Then, divide this number by three to get your weekend night rate and by four to get your rate for bookings from Monday to Thursday. That means your week-night rates will be slightly cheaper.

For corporate hotspots, you would switch things around so that you charge a higher rate on your busiest nights.

It’s a good idea to set your booking engine up to offer these super saver weeknight rates only when your rooms are below 70% occupied. Once you get to 70% occupancy, you can increase your rates slightly for weeknights.

Rate Setting According to Origin

Other kinds of special rates could apply to where your clients are booking from. For instance, if you know that you have a large mobile phone user market you could set up a special discount to encourage those who like to book via their mobile phones.

Another type of special rate is by geolocation. If you’d like to attract more people from a particular country or area to book with you, or already know that you have many guests from Japan, for instance, you could set up a special rate for all bookings coming from that location. In this way, you can grow market share from these countries.

Always offer the best rates to people booking directly with your website as opposed to via online travel agents. If you can’t offer them a cheaper rate, you can throw in something to sweeten the deal. A free meal, spa treatment, or Wi-Fi is usually enough to encourage them to book directly.

Public Vs Private Rates (Rack Rates)

Regular travel agents can provide an endless stream of bookings, as can event organizers and wedding planners. Set up a private rate for these operators so that they can benefit from a discount when they book bulk rooms with you.

You can manage this via a QR code that lets them view and take advantage of their special rates.

Importantly, you should make sure your rates push through to the metasearch engines, like Google and Trivago, so they’re visible to internet users looking for accommodation in your area.

Promos and Campaigns

Setting up a fixed rate for specials makes planning a lot easier. That way, when you want to run a campaign, you don’t have to do all the calculations from the start.

So, you’ll have your base rate and then you can discount a percentage of that according to whichever special you’re offering, be it a weeknight rate, rack rate, or promo rate.

You can also set up your booking engine to display certain rates when a client enters a particular promo QR code. This helps you keep track of where your bookings are coming from and assists with future marketing campaigns.

Extra Charges and Incentives

Decide upfront which extras you want to include in your rate and which ones you’ll charge extra for. Breakfast, spa treatments, fruit baskets and activities are some examples of these extras.

Don’t Forget the Golden Rules

Always offer the best rates and benefits to people who book directly on your website and avoid going below your minimum break-even rate if you can.

Follow these basic guidelines and before long you’ll find a happy medium that works to optimize both profitability and occupation rates.

If you need any help marketing your accommodation establishment, please get in touch and we’d be happy to offer you guidance and assistance.

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What Rates Should You Setup On Your Accommodation Establishment Internet Booking Engine?

We’re all in business to make money, but when you work in the hospitality industry, setting up rates can be fraught with pitfalls.

If you’re the only hotel in a one-horse town, you can structure your rates as you like, but if you’re doing business in a tourist hotspot, you’re surrounded by fierce competitors.

In these cases, it can be difficult to fill your rooms and pay your bills, let alone make a profit. So, if you’re wondering how your rates can stand up and stand out in this competitive environment, keep reading.

Subtle Imitation is the Key

The first rule of thumb when you’re working on your rates is to take whatever you’re doing with online travel agents and go one better.

Ultimately, you want all your clients to book directly through your online booking portal, so you don’t have to lose money to commission. There are several ways to do this.

Getting the BASE-ics Right

Your very first task is to work out your absolute minimum rate per night in order to break even. It’s unrealistic to figure this out according to 100% occupancy. Most accommodation providers only manage to fill around half of their room nights over the course of a year.

If at all possible, avoid setting your rates below this threshold, unless you can make up the money on selling extras like meals.

Step two is setting up your rates structure. You need to decide whether you want to charge per person, per room, or a set rate for a base number plus extra for additional people.

For instance, in a four-sleeper unit, you could charge x amount for the first two and then a certain percentage of that rate for every additional person. This can encourage a couple to book with you when you only have large units available, whereas a more costly ‘per room’ rate might put them off.

When it comes to refunds, make sure you have a more expensive refundable rate versus a cheaper non-refundable rate.

This means the guest pays less with the non-refundable rate, but they don’t receive a refund in the event of cancellation. A slightly elevated flexible rate for refundable bookings helps cover your admin costs incurred in refunding their payment if the guest cancels.

Yield Management

Yield management is a vital part of rate setting. Your rates should automatically fluctuate according to how full your rooms are, and even how full your competition is.

During busy periods, your rates can be higher, while quiet times call for tactical rate setting.

Time-Centered Rates

Demand in the accommodation industry wavers like the wind and depends very much on where you are located. In popular family areas, school holidays and long weekends tend to be your peak times. Your next most popular times would be during special events in your area, followed by weekends. Weeknights in these locations are the quietest times of all.

In some areas, summer is the top season, while other areas thrive in winter; again, it’s very much location dependent.

Likewise, if you’re located in an area that’s popular for business travel, the opposite may apply. i.e. weeknights might be your busiest times while things die down on weekends.

Only experience and time will tell which times are busiest for your hotel, lodge, or resort. If you’re unsure about how this works in your area, glance at some of your competitors’ websites to find out how their prices fluctuate throughout the year.

These are some of the time-centric rates you should set up to maximize occupancy year-round:

Everybody loves a client who books and pays early, so reward them with preferential rates. A discounted early bird booking rate can really encourage people to commit to their bookings and help you plan ahead.

These discounted fees for late bookings are good for filling up rooms at the eleventh hour. Make sure your system’s set up to offer these rates when you have a certain percentage of rooms available with a specified time frame.

One way to set up these rates is with a 50/50 split between these two time frames.

Take your total rate for the week and divide it by two. Then, divide this number by three to get your weekend night rate and by four to get your rate for bookings from Monday to Thursday. That means your week-night rates will be slightly cheaper.

For corporate hotspots, you would switch things around so that you charge a higher rate on your busiest nights.

It’s a good idea to set your booking engine up to offer these super saver weeknight rates only when your rooms are below 70% occupied. Once you get to 70% occupancy, you can increase your rates slightly for weeknights.

Rate Setting According to Origin

Other kinds of special rates could apply to where your clients are booking from. For instance, if you know that you have a large mobile phone user market you could set up a special discount to encourage those who like to book via their mobile phones.

Another type of special rate is by geolocation. If you’d like to attract more people from a particular country or area to book with you, or already know that you have many guests from Japan, for instance, you could set up a special rate for all bookings coming from that location. In this way, you can grow market share from these countries.

Always offer the best rates to people booking directly with your website as opposed to via online travel agents. If you can’t offer them a cheaper rate, you can throw in something to sweeten the deal. A free meal, spa treatment, or Wi-Fi is usually enough to encourage them to book directly.

Public Vs Private Rates (Rack Rates)

Regular travel agents can provide an endless stream of bookings, as can event organizers and wedding planners. Set up a private rate for these operators so that they can benefit from a discount when they book bulk rooms with you.

You can manage this via a QR code that lets them view and take advantage of their special rates.

Importantly, you should make sure your rates push through to the metasearch engines, like Google and Trivago, so they’re visible to internet users looking for accommodation in your area.

Promos and Campaigns

Setting up a fixed rate for specials makes planning a lot easier. That way, when you want to run a campaign, you don’t have to do all the calculations from the start.

So, you’ll have your base rate and then you can discount a percentage of that according to whichever special you’re offering, be it a weeknight rate, rack rate, or promo rate.

You can also set up your booking engine to display certain rates when a client enters a particular promo QR code. This helps you keep track of where your bookings are coming from and assists with future marketing campaigns.

Extra Charges and Incentives

Decide upfront which extras you want to include in your rate and which ones you’ll charge extra for. Breakfast, spa treatments, fruit baskets and activities are some examples of these extras.

Don’t Forget the Golden Rules

Always offer the best rates and benefits to people who book directly on your website and avoid going below your minimum break-even rate if you can.

Follow these basic guidelines and before long you’ll find a happy medium that works to optimize both profitability and occupation rates.

If you need any help marketing your accommodation establishment, please get in touch and we’d be happy to offer you guidance and assistance.

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